AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 531
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.... law, the Ld. CIT(A) erred in deleting the addition of Rs. 492,25,70,772/- made by the Assessing Officer on account of bad debts. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 45,92,32,087/- made by the AO in respect of exemption u/s 10(23G) of the l.T.Act. 4 On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in not appreciating the fact that the assessee is not eligible to exemption u/s. 10(23G) as it is not an infrastructure capital company as defined in Explanation 1 to section 10(23G) of the IT. Act, 1961. 5. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. The assessee, upon receipt of notice of hearing, has filed cross objections against the same. The memorandum of cross-objections read as under: - [1] On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) - XXVII, Mumbai [CIT(A)] erred in upholding the order of the Assessing Officer passed under section 143(3) r.w.s. 147 of the Act on the ground that the Assessi....
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....of each of the impugned additions are as follows: - 2.3.1 Deduction u/s 35DDA It transpired that the assessee floated an Early Retirement Option Scheme 2003 [hereinafter referred to as ERO Scheme] during the month of July, 2003 for all employees who completed 40 years of age and 7 years with the assessee bank. In accordance with the terms of Scheme as approved by RBI, the payment under ERO Scheme aggregated to Rs. 191 Crores, the break-up of which was as follows: - No. Nature of Payment Total (Rs.) 1. ERO: Cash Component 150,55,00,000 2. ERO: Annuity 15,45,00,000 3. SL Encashment 8,18,00,000 4. Proportionate LTA 62,00,000 5. Others 2,36,00,000 Total (A) 177,16,00,000 6. Leave encashment 1,75,00,000 7. Gratuity 2,52,00,000 8. Pension 9,57,00,000 Total (B) 13,84,00,000 Total (A) + (B) 191,00,00,000 The assessee, in its books of accounts, amortized the said amount of Rs. 191 Crores over a period of 5 years starting from August 1, 2003. Accordingly, the proportionate amount of 8 months period ending on 31/03/2004 amounting to Rs. 25.60 Crores was cha....
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....ten-off in the books of accounts which was the basic requirement of Section 36(1)(vii). In fact, the non- furnishing of requisite information / details by the assessee during original assessment proceedings was one of reason which led to reopening of assessment proceedings against the assessee. Resultantly, the amount of Rs. 492.26 Crores was disallowed and added to the income of the assessee. 2.3.3 Exemption u/s 10(23G) It was noted that the assessee claimed deduction of Rs. 110.62 Crores u/s 10(23G) on net basis after disallowing interest expenses relating to infrastructure bonds in view of insertion of Section 14A of the Income Tax Act. In assessment order u/s 143(3), the net income qualifying for deduction u/s 10(23G) was arrived at Rs. 45.92 Crores by applying the Gross profit rate of 13.69% to the gross income received amounting to Rs. 335.45 Crores. However, the said exemption was not, at all, in the opinion of Ld. AO, was available to the assessee in view of the fact that the assessee was neither an infrastructure company nor infrastructure capital fund established for mobilizing resources for financing infrastructure within the meaning of Finance (No.2) Bill, 1996 an....
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....facts of the case and I have also gone through the submissions and case laws relied upon by the Appellant. On reasonable consideration, I have noted that as regards bad debts of Rs. 1,649.92 crores the said issue has been discussed at length in the assessment order wherein the AO has disallowed bad debts to the extent of Rs. 1,157.66 crores. However, the AO has not discussed the bad debts of Rs. 492.25 crores. There is nothing on record to suggest that the AO has examined bad debts to the extent of Rs. 492.25 crores and had allowed the same by applying his mind. When the issue of bad debts is supposed to be considered and examined in entirety, he has omitted to consider the balance bad debts claim of Rs. 492.25 crores. Under this facts and circumstances, the AO had reason to believe that the income of the Appellant has been under assessed. As regards the of claim u/s.10(23G), the AO himself has noted in the original assessment order that there was no dispute about the role played by the Appellant in the economic development and the intention of introducing provisions of section 10(23G). Further the AO has also noted that the provision of section 10(23G) is applicable to all assesse....
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.... was submitted that the assessee fulfils conditions laid down u/s 36(2) of the act and the debts represent money lent in the ordinary course of assessee's business which has turned bad and therefore, the same has been written-off as per an elaborate system of identifying bad debts followed by the assessee. Since the bad-debts were written-off as irrecoverable in the books of account, it was sufficient compliance of Section 36(1)(vii) and the deduction thereof was allowable to the assessee. 3.4 It was observed by Ld. first appellate authority that the assessee had claimed aggregate bad debts of Rs. 1649.92 Crores during the impugned AY, out of which Rs. 1157.66 Crores was disallowed in regular assessment proceedings u/s 143(3) and the balance amount of Rs. 492.26 Crores was allowed. The amount of Rs. 1157.66 Crores as disallowed by Ld. AO while framing assessment u/s 143(3) was deleted upon further appeal before first appellate authority vide order dated 31/07/2008. Following the same, Ld.CIT(A) held that the balance amount of Rs. 492.26 Crores as disallowed in reassessment proceedings deserve to be deleted. The operative portion of the appellate order, for ease of reference, cou....
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....s. Our attention is drawn to the fact that assessment was reopened on following issues: - (i) Deduction allowed u/s 36(1)(viia) amounting to Rs. 129.12 Crores not adjusted while computing bad debts u/s 36(1)(vii) (ii) Unpaid bonus of Rs. 1.97 Crores remained to be added back. (iii) Excess Deduction of Rs. 11.07 Crores u/s 35DDA towards VRS payment (iv) Bad Debts of Rs. 492.26 Crores allowed without any documentary evidences. (v) Exemption u/s 10(23G) not allowable as the bank was neither infrastructure capital company nor infrastructure fund established for mobilizing resources The legal arguments raised by Ld. AR could be summarized in the following manner: - 4.1.1 Regarding adjustment of provisions made u/s 36(1)(viia) while computing the figures of bad-debts u/s 36(1)(vii), it has been submitted that the aforesaid adjustment was allowed during original assessment proceedings by Ld. AO with due application of mind. Our attention is drawn to the computation of bad debts u/s 36(1)(vii) to submit that the same were computed only after adjusting the bad debts provisions u/s 36(1)(viia) for Rs. 21.80 Crores claimed for AY 2003-04 and ....
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....n raised to the effect the reassessment proceedings merely at the behest of revenue audit objections, could not be sustained under law. 4.1.4 Regarding claim of bad debts u/s 36(1)(vii) for Rs. 492.26 Crores, drawing our attention to queries raised by Ld. AO & replies furnished by assessee during regular assessment proceedings u/s 143(3), Ld. AR submitted that the stated issue was extensively examined by Ld. AO which is evident from the fact that Ld. AO chose to disallow a sum of Rs. 1157.66 Crores out of total bad debts of Rs. 1659.17 Crores as claimed by the assessee and allowed the balance amount of Rs. 492.26 Crores. This could be possible only after scrutiny of all the bad debts. Another plea raised is the fact that no new fresh tangible material came to the possession of Ld. AO so as to trigger reassessment proceedings and therefore, the same was nothing but mere change of opinion. Reliance has been placed on judicial pronouncements as tabulated in para 4.1.3. The judgment cited by Ld. AO, in the quantum assessment order, are sought to be distinguished on the facts. 4.1.5 Another pertinent argument raised by Ld. AR is the fact that the assessee's appeal, on this issue, ....
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....tutory payments and did not fall within the scope of Sec 35DDA. Reliance has been placed on the decision of Hon'ble Bombay High Court rendered in Bhor Industries Limited 264 ITR 180. 4.2.2 Regarding disallowance of bad debts u/s 36(1)(vii), it has been submitted that in the original assessment order, it is the categorical finding of Ld. AO that the total amount written-off as bad debts was Rs. 1683.69 Crores. This amount of Rs. 1683.69 Crores includes Rs. 492.26 Crores which is evident from Page-5 of the paper book. Our attention is drawn to para 11.3 of the original assessment order to submit that Ld. AO did not doubt the existence of the debts or the write-off of the same but disputes that the debts have been written off without valid reasons and proper basis and the debts have been artificially written off as bad and irrecoverable. Therefore, there is no material for the AO to conclude in the reassessment that the debts do not exist or have not been written off. The assessee also offered Rs. 115.39 Crores on account of bad debts written back which establish that the assessee was following consistent policy of writing-off the bad debts. The observation of Ld. AO in reassessmen....
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..... AO while reopening the assessment. 5.2.4 The arguments are sought to be fortified by drawing our attention to the fact that deduction of unpaid liability of Rs. 1.97 Crores was allowed in regular assessment which remained to be added back as per Section 43B and therefore, there was certain escapement of income to that extent. This is further evident from the fact that aforesaid addition was duly accepted by the assessee by not contesting the same any further. The argument that the said mistake was rectifiable mistake was never raised by the assessee in its letter dated 22/12/2008 filed during assessment proceedings. The Ld. Sr. Counsel submitted that the revenue could take recourse to Section 147 even when it could have taken recourse to Section 154. In fact, it would be a safer option in such cases to take recourse to Section 147 since Section 154 proceedings are meant to rectify only those mistakes which are apparent from record. Our attention is drawn to observation of learned author Shri A.C. Sampath Iyengar made in "Law of Income Tax" [Volume 7", page nos. 11166 and 11167] wherein, in the light of certain case laws, it been explained by the learned author that in cases wh....
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.... 20%. This claim was allowed in full in regular assessment leading to under assessment of income to the tune of Rs. 11.07 Crores. There is no discussion, whatsoever, on the issue in the assessment order and Ld. AO did not make any addition on this account in regular assessment. The Ld. DR drew attention to the fact that query, in this respect, was made on 17/10/2015 whereas the reply was furnished by the assessee on 02/11/2016 i.e. after more than one year and therefore, it would be difficult to link the two. A plea has been raised to submit that it was quite possible that Ld. AO simply omitted to examine this issue particularly when there is no discussion on this issue in the assessment order. Hence, there is no change of opinion and the assessment was validly reopened on this issue. 5.2.7 Regarding excess allowance of deduction of bad debts for Rs. 492.26 Crores, it has been submitted that the assessee claimed bad debts to the tune of Rs. 1649.92 Crores in the Profit & Loss account. After detailed discussion in the assessment order, the Assessing Officer had disallowed bad-debt claims to the extent of Rs. 1157.66 Crores thereby implying that the balance bad debts of Rs. 492.26....
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.... reopening would swim or sink with the reasons recorded for reopening the assessment, similarly, the assessee could not supplement its objections by subsequent submissions. This argument was also not advanced before the CIT(A). On this ground, the new argument of the assessee deserves to be rejected. 5.2.10 It has further been submitted that the aforesaid decision of Hon'ble Bombay High Court would be distinguishable on facts since in that case the reopening was done beyond four years and the main issue was full and true disclosure by the assessee. The Judgment also referred to the proposition of law in the 2nd proviso to section 147 providing that reopening cannot be done on an issue which is the subject matter of appeal. The full facts of that case are not available. From the facts available in the order of the Hon'ble Bombay High Court, in that case, the claim of bad debt was Rs. 1503 crores under section 36(1)(vii) including write-off on fees for Rs. 62.09 crores. Excluding the figure of Rs. 62.09 crores, the balance figure of bad debts was Rs. 1441 Crores. The assessee provided full details through several submissions. The Assessing Officer considered these submissions, dis....
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....red on merits and listed in the assessment order. When the assessee filed appeal against the disallowance of Rs. 1157.66 crores, actually it filed appeal in respect of individual items of disallowance listed in the assessment order and those items of addition alone were the subject matter of appeal before the CIT(A) in terms of the 2nd proviso to Section 147. The balance amount of Rs. 492.26 was not in contemplation of the Assessing Officer; admittedly no details were filed. It is not known how many items were contained in the balance aggregate amount of Rs. 492.26 crores and what were the individual amounts and names and addresses of the debtors. They could not be a homogenous lot. They would have different characteristics. In the absence of these primary details, it would not be possible to consider the allowability or disallowability of these individual items of purported bad debts. It follows that without these details in the record, these items could not be the subject matter of consideration before the CIT(A). Hence, the judgment of the Hon'ble Bombay High Court in Writ Petition No. 1765 of 2011(supra) is not applicable to this case. That decision was confined to the facts of....
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.... Ld. CIT(A). The CIT(A) gave relief to the assessee by deleting the entire addition of Rs. 1157.66 Crores. The Revenue filed appeal against the order of the CIT(A) deleting the addition of Rs. 1157.66 crores. It could not file appeal to ITAT in respect of the bad debt claim of Rs. 492.26 crores because that was not a subject matter of appeal before the CIT(A). The Hon'ble ITAT in its combined order dated 03/11/2017 in ITA No.6137/ Mum/2008 for AY 2004-05 restored the matter to the file of Ld. Assessing Officer to examine the claim afresh in the light of the decisions of the Hon'ble Supreme Court rendered in TRF Ltd. V/s CIT [2010 323 ITR 397] and Vijaya Bank Ltd. V/s CIT, [2010 323 ITR 166]. 5.2.12 Proceeding further, Ld. Counsel submitted that the above sequence of events would show the order of the Assessing Officer which merged with the order of the CIT(A) dated 31/07/2008 was in respect of disallowance of bad debts of Rs. 1157.66 crores only. The purported claim of bad debts was not the subject matter of appeal before the CIT(A). Therefore, when the Assessing Officer passed the reassessment order dated 25/02/2009 the CIT(A) had already passed the appellate order dated 31/07/....
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....y allowed. The Assessing Officer has reopened the assessment on the basis of the finding in the subsequent assessment order for assessment year 2005-06 to the effect that the assessee is neither an infrastructure capital fund nor an infrastructure capital company. Hence, the exemption was wrongly allowed. The Ld. Sr. Counsel submitted that Ld. AO was well within his jurisdiction to reopen the assessment of impugned AY on the basis of finding given in another AY. Reliance has been placed on the decision of Hon'ble Supreme Court rendered in Raymond Wollen Mills Ltd. v. ITO [236 ITR 34], Hon'ble Bombay High Court in Rabo India Finance Ltd. v. DCIT 356 ITR 200 & Multi Screen Media Private Ltd. v. UOI and Anr. 324 ITR 54. 5.2.15 It has further been submitted that If the reopening is held valid on one of the several reasons, then the entire reopening is held to be valid. It is submitted that Ld. AO had given five reasons for reopening the assessment and the reopening is valid on all the reasons. However, even if reopening is held to be valid even on one reason, the whole reopening would be valid. This has been explained, on the basis of case laws, by the learned author in Chaturvedi &....
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.... enunciated by Rowlatt J. in his classic statement (vide Cape Brandy Syndicate v. IRC [1921] 1 KB 64, 71 cited with approval in ITO v. T.S. Devinatha Nadar [1968] 68 ITR 252 SC; AIR 1968 SC 623 (page 267 of [1968} 68 ITR):- In a taxing Act, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing to be implied, One can only look fairly at the language used. Reliance has also been placed on the decision of Hon'ble Madras High Court rendered in CIT v. Micromax Systems P. Ltd. [2005), 277 ITR 409(Mad) for the aforesaid principle of interpretation. 5.3.2 Proceeding further on the same lines, it has been the submissions that payments in respect of leave encashment, gratuity and pension, in the ordinary course, may be governed by different Rules and be subject to fulfilment of certain conditions like notice period, different clearances etc. which may not be applicable for this voluntary retirement scheme, which is a package. Hence it would be wrong to break this package into separate items and treat each item separately. This would leave the fi....
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....issions. 5.4.2 Our attention is drawn to the fact that decision of Hon'ble Apex Court rendered in ACIT V/s Rajesh Jhaveri Stock Brokers Pvt. Ltd. 291 ITR 500, as relied upon by Ld. Sr. Counsel for revenue, was rendered in a case where regular assessment was not framed but the return was processed u/s 143(1) and therefore, the claim of the assessee could not have been examined. Similarly, the decision of Hon'ble Supreme Court rendered in ALA Firm V/s CIT [189 ITR 285] deal with the provisions of Section 147(b) contrary to the facts of the present case wherein Ld. AO has either allowed or partially allowed the claims after consideration of all the material with due application of mind. The case law of Hon'ble Supreme Court in Biju Patnaik 188 ITR 247 deals with a situation wherein the reopening was upheld u/s 147(a) because there was failure to disclose the correct facts on the part of the assessee, which is not the allegation of revenue here. Our findings and conclusion 6.1.1 We have given thoughtful consideration to the rival submissions, written synopsis filed by respective counsels and deliberated on judicial decisions as cited before us. The undisputed position that eme....
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.... tax has escaped assessment, namely :- (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; (c) where an assessment has been made, but- (i) income chargeable to tax has been under assessed; or (ii) such income has been assessed at too low a rate; or (iii) such income has been made the subject of excessive relief under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed; Explanation 3.-For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue co....
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....es for which reasons were recorded by Ld. AO to reopen the assessment. 6.2 Proceeding further, we deem it fit to reproduce the reasons as recorded by Ld. AO on 26/06/2008 to reopen the assessment of the assessee, which read as under: - REASONS FOR REOPENING The above-mentioned case is reopened u/s. 147 of the Income-tax Act, 1961 for the following reasons. The assessee was allowed a deduction of Rs. 12912.59 lakhs as provision for doubtful debts u/s.36(1)(viia). Since the bad debts are allowable only after adjusting against the provision for bad and doubtful debts allowed u/s.36(1)(viia), there was excess allowance of bad debts leading to under assessment of income to the extent of Rs. 12912.59 lakhs involving short levy of tax of Rs. 4632.39 lakhs. Therefore, I have reason to believe that amount of Rs. 12912.59 lakhs has escaped assessment. 2. On perusal of annexure VIIA enclosed along with the TAR revealed that an amount of Rs. 1,97,18,380/- was shown as current years unpaid liability (unpaid bonus) remained to be added back. Assessee has claimed the above referred bonus as deduction on payment basis. Omission to do so had resulted in under assessment of income of ....
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....5. During the course of assessment proceedings in the A.Y. 2005-06, it was found that the assessee is not entitled to claim exemption u/s. 10(23G) of the I.T. act for the following reasons. "Exemption u/s.10(23G) is available to Infrastructure Capital Company and Infrastructure Capital Fund established for the purpose of mobilizing resources for financing infrastructure facilities as per Finance Bill, 1996 and CBDT Circular No.762 dtd.18.02.98. While scrutinizing the case of the assessee for the A.Y.2005-06, it has been found that neither ICICI is neither an Infrastructure Capital Company nor Infrastructure Capital Fund, established for mobilizing resources for financing infrastructure facilities within the meaning of Finance Bill & CBDT circular as referred above. Therefore, the assessee is not eligible for claiming exemption u/s. 10(23G) for the detailed reasons and discussion made in the assessment order for the A. Y.2005-06. Therefore net amount of exemption to be withdrawn and included in the income works out to Rs. 45.92 crores. " Therefore, I have reason to believe that an amount of Rs. 45.92 crores has escaped assessment. It is discernible from the r....
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....ble Bombay High Court in the case of ICICI Home Finance Co. Ltd. V/s ACIT [25 Taxman.com 241] has held as under: - 6. The power to reopen a completed assessment under Section 147 of the Act has been bestowed on the Assessing Officer, if he has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. However, this belief that income has escaped assessment has to be the reasonable belief of the Assessing Officer himself and cannot be an opinion and/or belief of some other authority. In fact, the Supreme Court in the matter of Indians & Eastern Newspaper Society v. CIT [1979] 119 ITR 996/ 2 Taxman 197 has held that whether an assessment has escaped assessment or not must be determined by the Assessing Officer himself. The Assessing Officer cannot blindly follow the opinion of an audit authority for the purpose of arriving at a belief that income has escaped assessment. In the present facts, it would be noticed that the reasons for which the assessment for the assessment year 2006-2007 is sought to be reopened by communication dated 12.10.2011 are identical to the objection of the audit authority dated 29.12.2009. The reasons do not r....
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....ing Officer and he chooses not to deal with the same, it cannot be said that he had not applied his mind to all the material before him. Further, as observed by the Full Bench of Delhi High Court in the matter of C.I.T. v. Kelvinator of India Ltd. [2002] 256 ITR 1/ 123 Taxman 433, when the entire material is placed before the Assessing Officer at the time of original assessment and he passes an assessment order under Section 143(3) of the Act a presumption can be raised that he applied his mind to all the facts involved in the assessment. 8. Therefore, in the present facts one would have to examine the contention of the Petitioner that the impugned notice is without jurisdiction as the self same facts were not only before the Assessing Officer but he had also viewed the very issues on which the assessment is sought to be reopened. So far as, the issue in respect of provisions claimed as deduction for arriving at taxable profit aggregating to Rs. 52.87 crores is concerned, the same was not only disclosed in the notes to account filed with the return of Income but also in response to specific queries raised during the assessment proceeding. It was reiterated at the hearing t....
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....findings in succeeding AY i.e. 2005-06 and therefore, applying the same to impugned AY would amount to review of the order which is not permissible under law. We concur with this submission provided the issue was already examined by Ld. AO in the regular assessment proceedings. To reiterate the settled position of law, review of orders by revenue authorities is not permissible under law and review in the garb of reassessment is not permissible. Further, as settled by numerous judicial pronouncements, the reassessment proceedings could not be triggered merely on the basis of change of opinion. In contrast, when no opinion was formed by Ld. AO on any issue during original assessment proceedings and the same was altogether skipped, there would be no bar to reach the requisite satisfaction on the basis of findings in subsequent assessment year. In such a case, deeming fiction of Explanation-2 would come into play and the income shall be deemed to have escaped assessment in cases wherein (i) income chargeable to tax has been under assessed ; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessive relief under this Act ; or (i....
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....g recourse to the provisions of Section 147. We find, ourself, in respectful agreement with the view taken by the Full Bench of the Delhi High Court. 10. It is further to be seen that the Legislature has not conferred power on the Assessing Officer to review its own order. Therefore, the power under Section 147 cannot be used to review the order. In the present case, though the Assessing Officer has used the phrase 'reason to believe', admittedly between the date of the order of assessment sought to be reopened and the date of formation of opinion by the Assessing Officer, nothing new has happened, therefore, no new material has come on record, no new information has been received, it is merely a fresh application of mind by the same Assessing Officer to the same set of facts and the reason that has been given is that the some material which was available on record while assessment order was made was inadvertently excluded from consideration. This will, in our opinion, amount to opening of the assessment merely because there is change of opinion. The Full Bench of the Delhi High Court in its judgment in the case of Kelvinator [2002] 256 ITR 1 referred to above, has....
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....e Bombay High Court in the case of Export Guarantee Corporation of India Ltd. V/s Addl. CIT [350 ITR 651] has held as under: - 8. To hold that the Assessing Officer must be deemed to have accepted what he has plainly overlooked or ignored in the assessment order would be to stretch the interpretation of Section 147 to a point where the provision would cease to have meaning and content. Such an exercise of excision by judicial interpretation is impermissible. When an assessment is sought to be reopened within a period of four years of the end of the relevant assessment year, the test to be applied is whether there is tangible material to do so. What is tangible is something which is not illusory, hypothetical or a matter of conjecture. Something which is tangible need not be something which is new. An Assessing Officer who has plainly ignored relevant material in arriving at an assessment acts contrary to law. If there is an escapement of income in consequence, the jurisdictional requirement of Section 147 would be fulfilled on the formation of a reason to believe that income has escaped assessment. The reopening of the assessment within a period of four years is in these c....
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....of objection raised by the revenue audit wherein it has been stated that the deduction of bad debts was allowed without adjusting closing provision for bad debts for Rs. 129.12 Crores. However, the assessee vide submissions dated 22/12/2008 opposing the reopening, had drawn attention to the statutory provisions of Section 36(i)(vii) & 36(i)(viia) to submit that the computation made by the assessee was as per law. Reliance was placed on the decision of Mumbai Tribunal rendered in Oman International Bank V/s DCIT & CBDT Instruction No. 17/2008 dated 26/11/2008 for the submissions that credit balance would be the opening balance i.e. the balance brought forward as on 1st April of the relevant accounting year. The said submissions would be further fortified by the fact that no such adjustment has been made in the reassessment order by Ld. AO. 7.1.4 The aforesaid factual matrix would lead us to conclude that an opinion was already formed by Ld. AO during regular assessment proceedings and the reassessment proceedings were triggered merely on the basis of Revenue Audit objections. The reopening was done on the same set of facts as available during original assessment proceedings. The ....
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.... by Ld. AR, would be distinguishable and not applicable to the facts of the case. Resultantly, we uphold the validity of reassessment proceedings on this issue. The issue, on merits, as already stated, would require no indulgence since the said additions have already been accepted by the assessee in view of the fact that deduction of the same has already been allowed in subsequent AY 2005-06 on payment basis. 7.3.1 Under assessment of income to the extent Rs. 11.07 Crores on account of Excess Deduction of Rs. 11.07 Crores u/s 35DDA towards VRS payment On legal grounds, the Ld. AR has raised the plea of change of opinion by drawing our attention to the fact that full disclosure of the issue was made before Ld. AO during regular assessment proceedings. The Ld. AO accepted the assessee's claim after due examination of facts and explanations offered by the assessee with respect to full claim of deduction on account of leave encashment, gratuity and pension. It has further been submitted that reopening has been done merely at the behest of Revenue Audit objections which merely expresses an opinion of the audit part....
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....ck the amount of Rs. 25.60 Crores on account of VRS Expenditure u/s 43B while computing its income for the year. Therefore, it has been submitted that the event which triggered these payments was retirement and though the employees retired consequent to exercising the option under ERO scheme, the payments were independently made and did not fall within the scope of Section 35DDA. 7.3.4 We have carefully considered the same. It is noted that the assessee has incurred total expenditure of Rs. 191 Crores on account of VRS expenditure. The said amount of Rs. 191 Crores was amortized in the books of accounts over a period of 5 years starting from August 1, 2003. Accordingly, the proportionate amount of 8 months period ending on 31/03/2004 amounting to Rs. 25.60 Crores was charged in the Profit & Loss Account. The said amount, in the computation of income has been added back u/s 43B. The provisions of Section 43B starts with non-obstante clause and provides for certain deductions to the assessee only on actual payment basis. The aforesaid amount of Rs. 191 Crores includes not only the 3 components viz. leave encashment, gratuity and pension but also all the other components of VRS exp....
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.... of Rs. 492.26 Crores allowed without any documentary evidences This Ld. Counsel for assessee has raised the plea of change of opinion as well as doctrine of merger to submit that the issue was extensively examined during regular assessment proceedings and the said issue was already subject matter of further appeal. It has also been submitted that new tangible material came into the possession of Ld. AO to take a different stand in the matter. On merits, it has been submitted that AO did not dispute the existence of debts or write-off of the bad-debts in the books of accounts and therefore, the decision of Hon'ble Supreme Court in TRF Limited [323 ITR 397] and Vijaya Bank [323 ITR 166] would apply. 7.4.2 The plea of Ld. Counsel for Revenue revolves around the fact that no opinion was formed on this issue in regular assessment proceedings since even basis details were not available on record. It has also been submitted that plea of doctrine of merge was never raised in the objection before lower authorities. The decision of Hon'ble Bombay High Court in assessee's writ Petition No. 1765 of 2011 dated 09/11/2011 was sought to be distinguished on factual matrix. 7.4.3 Upon car....
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....llary Steel & Alloys Ltd. 112,76,33,429 A-3 Uniworth Ltd. 83,64,29,010 A-4 Uniworth Textile Ltd 8,38,03,869 A-5 BPL Ltd 22,38,72,371 A-6 BPL Regrigerator 30,89,75,495 A-7 Birla VXL Limited 45,66,29,701 A-8 Jord Engineers India 26,88,45,831 A-9 Aafloat Textiles (AKAI Impex Limited) 21,95,64,375 A-10 Sanghi Spinners (I) Ltd 70,50,81,168 A-11 Gujarat Telephone Cables Ltd 39,81,37,186 A-12 Gujarat Optical Communication Ltd 10,89,42,542 A-13 Titagarh Industries 21,60,50,136 A-14 MH Mills and Industries Ltd 11,86,88,587 A-15 Balaji Industrial Corpn 7,11,11,649 A-16 Rama Newsprint and Papers 25,00,00,000 A-17 Gayatri Suga Complex Ltd 12,61,88,068 A-18 Shree Digvijay Cement Co Ltd 15,00,00,000 A-19 GSL (INDIA) Ltd 60,43,28,255 A-20 IG Petrochemicals Ltd 40,19,32,175 A-21 Sudershan Drugs & Intermediaries Ltd. (SDIL) 11,42,66,668 A-22 Suryavanshi Textiles Ltd 26,69,51,781 Total (A-1 to A-22) Rs. 841,47,92,332 11.1100 For the reasons discussed above, penalty proceedings are initiated u/s ....
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....ughly examined by Ld. AO in regular assessment proceedings and assessee's appeal against the same was pending, the observation of Hon'ble Bombay High Court in assessee's Writ Petition (for AY 2003-04) No. 1765 of 2011 dated 09/11/2011 would squarely apply to the facts of the case. The relevant observation of Hon'ble Court could be extracted in the following manner: - 17. In this regard, it needs to be noticed that the second proviso to Section 147 stipulates that the Assessing Officer may assess or re-assess such income other than the income involving matters which are the subject matter of any Appeal, Reference or Revision, which is chargeable to tax and has escaped assessment. In the present case, it has emerged from the affidavit in reply of the Revenue that the Assessee had filed an Appeal to the CIT(Appeals) against the order of assessment. Paragraph 4(v) of the reply states that by his order dated 29 September 2010, the CIT (Appeals) partly allowed the Appeal filed by the Petitioner by accepting the claim under Section 36(1)(vii) and Section 36(1)(viii) and by allowing a proportionate deduction under Section 10(23G) on the basis of the ratio adopted in the earlier As....
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....ions, as made by Ld. AO in regular assessment, with success before Ld. first appellate authority. The revenue preferred appeal against the same before this Tribunal vide ITA No. 6137/Mum/2018 order dated 03/11/2017 wherein the matter, vide para 34 of the order, was restored back to the file of Ld. AO with certain directions. Since a view has already been taken by the co-ordinate bench of the Tribunal on this issue, respectfully following the same, we deem it fit to restore the matter back to the file of Ld. AO on similar lines. However, it is made very clear that our adjudication of the issue, on merits, would come into play only if our stand, on legal grounds, is subsequently reversed by any higher judicial authority. 7.5.1 Exemption u/s 10(23G) not allowable as the bank was neither infrastructure capital company nor infrastructure fund established for mobilizing resources as found while scrutinizing the return for AY 2005-06. As stated earlier, this issue stem from findings in AY 2005-06. Similar arguments of change of opinion and doctrine of merger has been raised by Ld. Counsel for Assessee. 7.5.2 Upon perusal, we find that the assessee during regular proceedings, had ....